Women – take charge of your financial future

Insights from René Grobler, Head of Investec Cash Investments during Women’s Month, South Africa

Over the past few decades women have made incredible strides in terms of wealth accumulation: in the U.S women have overtaken men and now control 51% of all personal wealth in that country, according to a 2015 report from BMO Wealth Institute.

In South Africa, the gender wealth gap tells a different story as women don’t hold anywhere near as much as men but the fact remains locally, women’s financial responsibilities are increasing. So are women upping their financial savvy to keep up with their growing responsibilities and wealth and, if they aren’t, why and what can be done to change this?

90% of all women will be required to make their own financial decisions at some point in their life, but most don’t feel confident enough. René Grobler, Head of Investec Cash Investments explains, “I don’t necessarily think women feel that confident about their financial decisions but I don’t think it’s necessarily a gender issue. It has a lot to do with your financial literacy, how you were educated, and the examples that you’ve had in your life around how you manage money.”

Studies show that on average women live five years longer than men, which means, for example, if a woman starts saving at age 25, she needs to save 11% more than a man (who starts at the same time) over the period of their lifetime, due to more medical and living expenses the woman is likely to incur.

Dependent on life stage and income, women have different needs, which can range from lifestyle preferences to protection and education of family members. “Women are often thinking far more about immediate needs – they’re thinking for the ‘now’ in terms of how they’re taking care of the family. This focus on immediate financial needs serves women well in many respects, but ultimately there remains an importance for financial sustainability in the future and into retirement, not just for the family, but for the woman, or wife or mother, herself.

According to the VISA Money Matters Survey (2012), 35% of South African women say they look to their spouse or partner for financial advice. “I remember hearing a phrase, ‘A man is not a financial plan,’ and it has never left me. For those that are married, I think this is as much a critical consideration as when you are single. It is risky to completely rely on someone else for your financial security, rather maintain your financial independence and take responsibility for your financial future,” says Grobler. The unexpected is the factor that can dismantle security and independence, such as the 3Ds – divorce, death and disability. This reality for many women can be financially crippling unless adequately prepared for.

Many women put off thinking about their finances because they don’t feel they have the time or because they consider the issue too complex or daunting. “The problem with procrastination is that no decision is actually an action and unfortunately does come back to haunt you later in life.”

Grobler urges women to consider the following financial matters to ensure certain safeguards are in place that can help to prepare for unforeseen events:

A will: Often a time issue, a will, and the reality of death is something we prefer to ignore for the time being.

Medical Aid: Don’t overlook checking which plan you’re on, and all dependents need to be considered, including your parents, because unforeseen healthcare and hospital bills can be extremely costly.

Life cover: One must calculate the needs of the family to remain financially secure in the event that you die. Death is never an easy thing to contemplate but not making provision in the form of life cover could leave your family with even more than grief to deal with. Don’t risk leaving a legacy of debt for your loved ones.

Disability cover: 50% of the workforce in South Africa are female, and 2 out of 5 are earning as much as their partners. Add to this the reality that many women can’t afford to stay at home because they’re also breadwinners in the family and the need for disability cover is clear. In the event of being incapacitated for a period of time for any unforeseen event, is there sufficient monthly income to pay the necessary bills?

Savings: Do you have a soft cushion to fall back on for a rainy day or a dream that you wish to fulfil for yourself or a family member?

Retirement: Have you calculated the monthly income that you might need together with a financial adviser, and started to put the steps in place to meet that target? Remember you are never too young to begin this process.

Grobler questions whether we are “teaching our children about the value of money and savings?” The young girls of today will be the women of the future, and the importance of financial literacy, and changing the historical norm cannot be underestimated. In Visa's International Barometer of Women's Financial Literacy conducted in 2013, overall, South African women ranked 23rd out of 27 countries in terms of financial literacy, while in terms of talking to their children about money matters, they ranked second last at 26. Teaching children about the importance of setting and sticking to a household budget can play a critical and early role in forming good financial habits.

“Women have never been this empowered, they’ve never taken up this many roles and for some, had as much income. The ‘gender agenda’ is firmly in sight and the world can no longer ignore the requirements and demands and importantly, the place of women in the world. With this new found privilege and power comes greater financial responsibility. Educate yourself, take your destiny into your own hands – seek out the assistance of a financial planner and act today,” Grobler concludes.